- Demand for purchasing reached a record high in 2022.
1.136 tons – That’s the amount of gold purchased by central banks worldwide in 2022, according to the World Gold Council (WGC). They noted that it was a record-breaking amount of purchases in recent years. Leading the trend are developing economies, as their gold reserve ratios are lower than those of developed economies.
- Experts predict an increase in demand for purchases by central banks worldwide.
According to the WGC (World Gold Council), emerging markets are expected to continue increasing their gold purchases and expanding their reserves. These national central banks have clearly demonstrated their intention to do so, as evidenced by the following:
The gold market today is more fluid compared to the period of the Bretton Woods system. The “A structured programme of controlled sales” has reduced excessive dependence on gold by Western central banks. Meanwhile, emerging markets still have a lower allocation of gold, despite having added a significant amount in recent years.
In a context of no real interest rates from government bonds, the US dollar has experienced excessive reliance. “Gold still plays a crucial role in financial reserves”… This affirmation is primarily confirmed by European countries. This confirmation is demonstrated by the absence of significant sales in recent times.
- Factors driving the demand for gold:
In the context of an economic crisis, gold becomes more attractive compared to other reserve assets. This is because:
- It is a politically risk-free asset.
- It is not subject to depreciation like currencies.
- It cannot be manipulated in price during currency wars.
In general, an increasing purchase of gold by central banks is expected to continue. Particularly, there is a growing trend of emerging economies increasing their gold purchases.
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn
